Anthony Albanese’s feform project doesn’t stop at one big hit, it needs to be ongoing

The Prime Minister put the challenge out to businesses big and small to come to him with their best ideas for reform, but executives can’t sit around waiting for Canberra to get moving. A massive reform effort is needed, but the best businesses are finding ways to thrive despite complication and barriers they often confront across all levels of government.

The message from business at Australia’s Economic Outlook forum, hosted by The Australian and Sky News, was not to overcomplicate the idea of reform.

There’s always a real risk that the solution to Australia’s sluggish efforts involves one big blockbuster reform, and the political will stops there.

But the reform project can’t be a one-off. As business argues, it is continuous, and Australia’s efforts here have largely stalled over the past decade. We’re now all paying for it with an economy locked in a low-growth cycle.

The boss of AustralianSuper, Paul Schroder, said at least the PM is asking the right question of how can Canberra help, but then governments need to get out of the way rather than pick winners.

“Imagine if we went into companies that we’re investing in and said, ‘How are you making money in this business, and what does your future look like?’ And they said, ‘Oh, we’re just waiting for the government to change a few things”.

“No chance – that’s not how you make money,” Schroder told Australia’s Economic Outlook forum.

The AustralianSuper boss says there are three things his industry fund asks before it invests in a company: Has the business got a great idea? Has it got a great management team? And is this the right time to buy that business?

If these can be answered well, AustralianSuper writes the cheque for long-term funding and gets out of the way. Government should take a similar approach, he argued. For his part, Albanese told the forum, he doesn’t want to complicate the reform discussion by ruling in or out reform ideas in the lead-up to next month’s productivity summit.

However, it’s still not clear just how much appetite Albanese has to pursue fundamental tax reform, which is where much of the nation’s productivity problems lay.

As Schroder says: “If you run a national business in Australia at the moment, you have about 100 different taxes you have to pay – How stupid is that?”

The early feedback from business is the PM and his Treasurer Jim Chalmers don’t just want the productivity summit to dwell on obvious suggestions to the reform agenda like tax and labour markets. Rather, they are pushing business to dig deep to help them come up with creative solutions.

AustalianSuper CEO Paul Schroder. Picture: Max Mason-Hubers

Albanese on Friday said he wants Australia to build “beyond” its economic strengths of mining, education, superannuation, farming and renewable energy.

Schröder again says this is a great ambition and aspiration, “but I think we should be diverse around the things we’re already starting to be good at”.

Chalmers this week set out the framework for next month’s discussion with the roundtable to focus on three priority areas: productivity, economic resilience and budget sustainability.

He sent out the first round of invitations to peak business groups and unions, including the ACTU, with Danielle Wood of the productivity commission set to guide the forum. More invitations are set to follow.

Myer Group executive chair Olivia Wirth – also at Australia’s Economic Outlook forum – spoke for many in business by saying the two big reform issues of tax and labour market count.

“What I heard from the Prime Minister was that no idea is off the table – which I think is really encouraging,” Wirth says. “That has to include everything from workforce reform to general issues around tax reform. If it is going to be an open debate and discussion, and that the government is going to be open to all ideas, including from the business community, but from other important drivers of the economy. I think that is probably what’s required.

“There is a huge amount of change occurring, and I think it is important for Australian companies to be open for investment, but you can only do that if the government settings are right. It’s timely, and we’ll wait and see what comes out the other side.”

Myer Group executive chair Olivia Wirth. Picture: Max Mason-Hubers

Wirth is overseeing her own major change program at Myer, setting the retailer up to grow in a market even in the face of intense retail competition at a store level and online. She’s doing this by reinvigorating Myer’s loyalty programs, overhauling the product mix and building a diversified retailer through the recent merger with Solomon Lew’s cashflow-rich domestic retail brands like Just Jeans and Portmans. Data, analytics and technology are at the centre of the retail rebuild.

Wirth says one thing she’s looking forward to is working with business to have a narrative around the Australian economy about the longer-term path for the nation. In a world of rising geopolitical shocks, knowing an economic future will help most Australians navigate some of the shorter-term uncertainties.

Super’s soft power

A “soft power” mission of industry super funds and the Future Fund to Washington and New York back in February may have played its part in the scrapping of Donald Trump’s feared Section 899 tax. This was the so-called “revenge tax” that would have given Washington the power to tax businesses and investors with ties to foreign countries considered to be levying “unfair foreign tax” against US companies.

The scope of the tax included pension funds, sovereign wealth funds and non-US companies with operations in the United States. This would have made investing in the US unsustainable for the Australian retirement funds.

The genesis of the tax was around US tech companies Washington felt were being unfairly targeted through the OECD’s efforts to close off tax minimisation efforts through setting a base level for multinational taxes.

The February mission represented Australia’s top industry super funds including AustralianSuper, ART, Hostplus, Aware, REST and UniSuper, with nearly $1 trillion in collective funds looking to invest in the United States.

The Washington leg included a dinner between the funds, Australia’s US Ambassador Kevin Rudd and US Treasury secretary Scott Bessent and US commerce secretary Howard Lutnick, where a range of topics including section 899 were discussed. Here it was put to the US officials directly about the uncertainty it could have on inbound investment just as Washington was looking to drum up new sources of productive capital.

Wall Street had been arguing against the measure as well as other countries. Bessent last week confirmed section 899 had been quietly scrapped from Donald Trump’s “one, big, beautiful bill” following agreements made at the G7 meeting.